European states keep Swiss bank secrecy under siege

Zurich, February 3, 2010

Pressure mounted on Switzerland's already weakened bank secrecy on Wednesday as some European governments vowed to join Germany in the battle to hunt down tax cheats in the Alpine nation.

Germany sent shivers through the large Swiss private banking industry this week when it said it was prepared to pay for stolen data belonging to potential tax cheats at a Swiss bank, raising the bar in the fight against tax evasion.

Now, the Dutch, Belgian and Austrian governments have also flagged interest in obtaining a copy of a compact disc containing tax-sensitive data that the German government could soon acquire from an informant.

Coordinated action by European governments poses a serious threat to Switzerland, which is struggling to honour a deal with the US to end a tax dispute against UBS.

The country remains under pressure as the world's largest offshore centre despite having promised to relax its bank secrecy laws in March.

Many European governments are under pressure to raise tax revenues after injecting billions of euros into several large banks to fight the financial crisis.

A spokesman for the Dutch finance ministry said on Tuesday the Dutch had told Berlin they would be interested in having any information related to Dutch taxpayers that may appear on the CD Germany is about to purchase.

Austria, which protects its own bank clients with secrecy rules, also showed an interest.

'Should there be evidence that the CD (with the stolen bank data) contains information on Austrian taxpayers, we would naturally have great interest in analysing those,' a spokesman for Austrian Finance Minister Josef Proell was quoted as saying in Der Standard newspaper.

Belgian newspaper De Standaard said Belgium, which is giving up banking secrecy, also wanted copies of the Swiss data if Germany got them. The finance ministry declined to comment.

The Swiss government is discussing the issue at a cabinet meeting and will hold a press conference later on Wednesday.

Swiss interior minister Didier Burkhalter said on Tuesday Berne wanted to seek a solution to the data spat 'to ensure a stable relationship with Germany', the country's main trading partner and the harshest critic of Swiss bank secrecy laws.

Switzerland promised in March last year to sign a raft of new tax treaties to avert ending up on an international blacklist. But it still needs to finalise agreements with Italy and Germany, whose citizens make up a large portion of the Swiss private banks' client base.

Nearly $6 trillion of wealth is managed in Switzerland, with potentially almost one-third of it undeclared, analysts have said. Bankers fear the latest set of attacks could undermine the country's entire private banking model.

Several European governments have tried to lure back some of the money hidden in tax havens by launching tax amnesties. The Dutch government said on Tuesday wealthy savers last year declared 2.15 billion euros ($3.01 billion) under a penalty-free amnesty, with a third of the declared accounts hidden in Switzerland.

Britain has also targeted wealthy residents with hidden offshore money via a so-called voluntary disclosure programme. The most successful amnesty so far has been an ongoing Italian tax amnesty, which recouped nearly 100 billion euros in three months, most of it hidden in the Italian-speaking Swiss canton of Ticino.

France and Germany, on the other hand, have not launched amnesty but have accepted stolen bank data from informants. - Reuters